Pricing new and remanufactured products based on customer purchasing behavior

Firms' pricing strategies are largely influenced by customer purchasing behavior. By considering whether to invest in customer purchasing behavior analysis, firms can choose a discriminatory or a non-discriminatory pricing model. This paper presents a two-period duopoly that the original material supplier (OS) supplying new products faces a competition of an independent material supplier (IS) providing remanufactured products to analyze each party's competitive strategy under each pricing model. We also identify situations under which the firms would obtain more profits and cause less environmental impact under the model with price discrimination compared with the model without price discrimination. A numerical study is provided to illustrate the performance of the model. A sensitivity analysis with respect to primary parameters is used to assess the stability of the model. The proposed model could be applied in many industrial fields where the managers have the full awareness of extended producer responsibility, and they are willing to engage in the project related to remanufacturing.